philip lelyveld The world of entertainment technology

NFTs Are a Privacy and Security Nightmare

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Another way to describe it is as a low-privacy environment that gives, among others, law enforcement access to the transaction history of the entire network—as was the case when the US Department of Justice arrested two individuals accused of stealing $4.5 billion worth of cryptocurrency. Said assistant attorney general Kenneth A. Polite Jr. at the time, “Today, federal law enforcement demonstrates once again that we can follow money through the blockchain.”

Crypto wallets may be pseudonymous, but many exchanges have Know Your Customer protocols and collect tons of other data on users. Moreover, transactions necessarily require sharing your wallet with another party. As software engineer Molly White wrote, once someone knows your wallet address, privacy can be difficult, if not impossible to maintain: “Imagine if, when you Venmoed your Tinder date for your half of the meal, they could now see every other transaction you’d ever made—and not just on Venmo, but the ones you made with your credit card, bank transfer, or other apps, and with no option to set the visibility of the transfer to ‘private.’” ...

This means that, if a user ties an NFT to any part of their online or IRL identity—say by using an NFT as a profile picture on Twitter or maintaining a profile on an NFT marketplace—it becomes trivially easy to find out what else their wallet has been up to. ...

See the full story here: https://www.wired.com/story/nfts-privacy-security-nightmare/